Economists Debate Job Numbers: Good News or Bad?

New U.S. job statistics for August show the unemployment rising to 9.6
percent. The private sector added 64,000 jobs, but that was offset by
public sector reductions and the wind-down of census hiring, which
brought the total change in August to 54,000 jobs lost. What do these
numbers mean? Are they good news or bad news? Just how despondent should
we be?

'Treading Water': Not Double-Dip, Not Recovery The New York Times' Motoko Rich writes,
"With businesses adding about half the number of positions needed
simply to accommodate population growth — much less dent the ranks of
the jobless — the unemployment rate ticked up to 9.6 percent, from 9.5
percent. 'The overall picture is one where the labor market is still
kind of treading water,' said Joshua Shapiro, chief United States
economist at MFR Inc. 'It’s better than sinking, but it’s certainly not
surging ahead.' Given the continuing addition of private jobs, albeit at
a tepid pace, Friday’s monthly snapshot of the labor market seemed to
calm fears of a double-dip recession. But the numbers are likely to do
little to assuage political pressure on the Obama administration in the
run-up to the midterm elections."

Bad, But Less Bad Than Expected The Economist's Ryan Avent explains,
"The new figures, including revisions to June and July data, show
employment growth that is indeed flattening, but by less than seemed to
be the case last month. And crucially, key figures in the employment
report did not reverse course in August as many had feared. Employment,
ex-census, increased. Private employment rose, as well (and July private
employment growth was revised upward). Firms didn't trim hours, as
might have been expected based on the flurry of bad news. ... It should
be possible to recognise that these improvements, in the context of the
month that was August, are genuinely positive. I'm not sure that we're
operating in a linear world right now. If firms become a bit more
optimistic they may opt to boost hiring and investment, increasing
consumer optimism, and feeding a virtuous cycle toward a more
appropriate level of employment growth. If firms become a bit more
pessimistic, then they'll hoard more cash, markets will fall, deflation
fears will rise, and so on. This is, objectively speaking, a bad jobs
report. But if you feel worse today than you did yesterday, you're not
paying attention."

...But Still 'Sucks' Liberal blogger Duncan "Atrios" Black sighs, "The private sector number will be seen as good news as it is better than expected but it still, you know, sucks." He adds
of the White House refusal to pursue further stimulus measures, "It's
incredible to me that genius political strategists think that what
voters really want are tepid and timid half measures."

Slowing Decline Not Same as Improvement Economist Brad DeLong notes,
"'Getting Worse Slowly' Does Not Mean 'Is Better'. ... We would need 9 X
120,000 = 1,080,000 net private sector jobs in the nine months since
last December in order to be able to hold the trend unemployment rate
steady. Things in the labor market are not getting worse quickly. But
things in the labor market are far from better by any sane metric."

We Can Thank the People Who Gave Up Economist Mike Shedlock writes,
"The drop in participation rate this year is the only reason the
unemployment rate is not over 10%. The drop in participation rates is
not that surprising because some of the long-term unemployed stopped
looking jobs, or opted for retirement. Nonetheless, I still do not think
the top in the unemployment rate is in and expect it may rise
substantially later this year as the recovery heads into a coma and
states are forced to cut back workers unless Congress does substantially
more to support states."

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